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Summary:

TracFone had another enormous growth year. Though it doesn’t have a network of its own, it is starting to grow close to national carrier size off of the success of Straight Talk and its other prepaid brands.

When we think of the national mobile operators we immediately recall the Big 4: Verizon, AT&T, Sprint and T-Mobile. But there’s really one more. TracFone Wireless may not own any networks of its own but it’s the fifth largest carrier in the U.S. with 22.4 million customers at the end of 2012.

The virtual operator, owned by Latin American multinational América Móvil, is only a third smaller than T-Mobile, and it’s growing a lot faster. TracFone had a bang-up year, growing its subscriber base by 13.3 percent in 2012. Over the holidays it added 753,000 subscribers alone, which beat out every other operator in the U.S. save AT&T and Verizon. Consumers appear to like the cheap no-contract services TracFone is selling.

TracFone managed to grow so big only by the grace of the large carriers. As a mobile virtual network operator (MVNO), TracFone buys wholesale CDMA and GSM voice minutes and 3G data from all of the Big 4 and feeds them into its multiple brands: Straight Talk, Net 10, Simple Mobile, Telcel América and SafeLink Wireless. All of them target different types of consumers – Straight Talk goes after iPhone users on a budget while Telcel targets the Mexican community in the U.S. – but what they all have in common are inexpensive plans sold without contracts.

While there are dozens of new independent MVNOs in the U.S., most of them tend to be modest outfits. One of the most successful of the new breed, Solavei, has only 100,000 subscribers. On the other hand, while Solavei has been existence only a half a year, TracFone has had plenty of time to grow. It outdates most of the modern carriers, launching in 1996 long before the term MVNO came into existence. Back then it was simply a prepaid reseller.

Image courtesy of Shutterstock user Mopic

  1. No contract is always a bit hit for MVNOs. No strings attached and usually it is cheap to obtain a no contract plan.

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  2. Tracfone and its brands have the clause in the TOS that you’re not allowed to stream audio or video over their “network.” They quantify this by how much bandwidth you use within a day (or a month). I have a problem with this. If they really wanted to block streaming media they could just block RTSP at the application layer (I think that would capture most use cases). But that’s really not what they’re after – they just don’t want you to use you tube “too much.” But who would pay an MNVO/carrier if you couldn’t do any streaming? To me that’s sort of a sketchy provision, but they won’t tell you this, straight up.

    Obviously people are OK with it if they are profitable.

    I still don’t get why no contract is such a big deal. On the other hand, a 2 year contract is a big deal. Some carrier/mnvo should hit a midpoint with a 6 month contract basis. Will people even defect if they get a strong signal?

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    1. Well, streaming on my cell is not something I use it for right now. I use it to talk and text modestly. When I switched from att, I went from paying $60 a month to $10 and I have all I need. It completely depends on how you plan to use it. I need no bells or whistles and I begrudged paying for them.

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